Can I Avail of Loan Against Property Without a Property Map?
Are you tired of keeping track of loan accounts and paying multiple EMIs every month? Are you looking for an affordable debt consolidation loan? Do you think now is the best time to do some capital infusion in your small business? Then there is no better choice than a Loan Against Property. There are several banks and NBFCs which will offer you a Property Loan at an affordable price and easy terms with only the minimal documentation.
SBI Loan Against Property is one of the best choices when it comes to getting a loan from an established public sector bank. SBI is the largest bank in India. If you want your financial dealings to be with a reliable bank, SBI is just about as reliable as they can ever become. SBI offers loan amounts starting from Rs 10 lakhs. It can go up to Rs 7.5 crores depending upon the nature and location of the property. The bank will charge just 1% of the loan amount as processing fee, and even that is subject to a maximum of Rs 50,000 plus taxes.
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SBI Property Loan is also available on rented properties. The bank can create an equitable mortgage on the property, and the bank officer will obtain an assignment of rental receivable. The lending will involve an irrevocable power of attorney in such a case. SBI Loan Against Property is granted for durations between 5 years and 15 years. All SBI LAPs must be liquidated before the eldest borrower reaches 70 years of age. The borrower must have a minimum Rs 3 lakh annual income though if the borrower has an annual income of more than Rs 10 lakhs, they can take loans with up to Rs. 60,000 monthly EMI. Loan to value ratio is 65% for loan amount below 1 crore and 60% for loan amounts above Rs. 1 crore.
When you Apply for Loan Against Property, you will be required to submit your documents as a borrower and a set of documents related to the property. The latter includes the property title deed, property tax documents, and property map. Maps are necessary property documents for property collateral loans as defined by many banks because they want to keep their risk at a minimum and would look for every factor that will enable them to liquidate the collateral quickly when needed.
Remember that the bank is in the money business, not the property business. The bank will always try to cover its risk to the maximum possible extent when it lends out the money to any borrower. Banks will also try to cover their costs when they lend out money because this is how they make money.
Let us now look at how Loan Against Property Interest Rates are calculated. Banks get money from RBI or its depositors at a specific rate. They will lend you money at the Marginal Cost of Funds Lending Rate (MCLR) plus some overhead. This way, they cover their own cost of funds, their cost of business operations and profit margin, and account for the risk which they spread across multiple borrowers. This means that if a few borrowers default, banks can still rely on other borrowers keeping up with their payments and thus keeping the bank in business.
The property, which is without a map, creates a considerable risk for a bank that lends on it. Municipal law in many areas requires that only a certain portion of the total land area can be constructed upon. The rules applicable in Delhi are that construction can be done only on 90% of the plot area for ground, first and second floor. In many areas in the NCR region, the much lesser floor area ratio is allowed for the lower ground floor. In many places, the home-owners must leave as much as 40% of the area on the ground floor as empty. If this requirement is not fulfilled, the municipal authorities of the area will send demolition notice for the external construction. In many cases, where the demolition does take place, the remaining property also becomes useless. This creates a considerable risk for the bank.
Further, if any person disputes such a notice and the matter goes to the court of law and the property gets sealed or if a stay order is obtained on any activity at the said property, the bank which has given Loan Against Property will be left holding the risk. Similarly, if the borrower is paying loans through the rental of the property or if the property was being used for conducting any business or commercial activity, the bank will be left holding all the risk. In many cases, the borrower may continue to pay the EMIs with income from other sources, but a strong risk persists in any such condition.
Yet all hope is not lost. There are many banks and NBFCs which take calculated risks. They may give LAP without a map if there are some conditions which are met, for example, there is no deviation in the staircase with plot limit and for construction beyond the limit where the deviation is allowed from 15% to 20%. However, this is given on a case to case basis. In all such conditions, the Loan Against Property interest rates will be much higher, at least 2% higher than a property with a map. Banks will give such loans on the third and fourth floor in Delhi, but for other areas of Delhi NCR, it is available for ground, first, and the second floor only.
If you are unable to find a bank that is open to giving you Loan Against Property without a map, you should consider checking with various NBFCs. These non-banking financial companies tend to operate at slightly higher risk levels than banks because they do not have the heavy regulatory requirements that the RBI imposes upon the commercial banks.
The best way is to check with online loan marketplaces like MyMoneyMantra, who can get you in touch with multiple loan providers and can assist you in the overall property based loan process. Loan Against Property without a map may seem like a tough nut to crack, but it is never impossible. All that is needed is the perfect guidance and a lot of research.
Also Read: Top 10 Lenders with Lowest Interest Rates on Loans Against Property
To apply online for Home Loan, Personal Loan, Credit Card, Business Loan & LAP visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 4 million+ happy customers since 1989.